— Flight-model construction of the second-generation constellation of Globalstar mobile communications satellites has begun at prime contractor ThalesAlenia Space, with the first six satellites to be completed by June
2009 in
time for a launch in September, according to Globalstar and ThalesAlenia Space officials.

The officials said that despite questions about Globalstar’s cash balance in the coming months, the Milpitas, Calif.-based company has continued to deposit the scheduled payments into an escrow account from which ThalesAlenia Space makes regular withdrawals under the contract’s provisions.

“We put cash in this account as we have always done under the contract and the account remains topped up,” said Anthony J. Navarra, Globalstar’s president of global operations. “I have heard these market rumors about contract renegotiation and so forth, and I can say they are not true.”

and Cannes, France-based ThalesAlenia Space in November 2006 signed a 661 million euro ($859 million at the exchange rate of the time) contract to build 48 second-generation Globalstar satellites, which will be merged into the existing constellation and eventually replace the current satellites.

A key feature of the 715-kilogram second-generation satellites is that they are designed to operate for 15 years in a 1,414-kilometer low Earth orbit – double the service life of the current satellites.

In an Aug. 28 interview, Navarra said the Globalstar constellation’s degrading voice communications capacity will be returned to full service by mid-2010 after the first couple of launches of the next-generation satellites.

Jaeger, executive vice president for telecommunications satellites at ThalesAlenia Space, said the manufacturer has completed design and early production of the second-generation Globalstar payload components. Starting in January, they will be shipped to the company’s plant in
to be mated with their service modules, the part of the satellite that provides power and other basic functions to the communications payload.

In an Aug. 28 interview, Jaeger said Globalstar has kept up to date on the contract payments and that there are no plans for the manufacturer to add a vendor-financing feature or other softeners to the existing contract.

“We have received all the scheduled payments and we continue to be paid regularly as per the contract,” Jaeger said.

Reporting its financial results Aug. 11, Globalstar said it spent $128 million in cash in the six months ending June 30 and had some $180 million in available liquidity remaining at that time. The company has said it would seek to raise an undisclosed amount of cash this fall to enable it to fund operations through the launch of the first second-generation satellites.

The ThalesAlenia Space contract includes an option for 18 additional satellites beyond the first 48, as well as an option for Globalstar to order an accelerated delivery schedule. Neither of these options has been exercised. But one industry official said Globalstar has begun talks with ThalesAlenia Space on accelerating the production of six satellites to protect the service in the event of a launch failure.

The Arianespace consortium of
, is under contract to launch 24 of the 48 second-generation satellites, with an option to handle the remaining 24 satellites as well. Arianespace will be using a modified Russian Soyuz rocket, equipped with a new payload dispenser, to launch six second-generation Globalstar satellites at a time.

The option being considered would speed the delivery of the 25th to the 30th satellites, the industry official said.

said Arianespace has confirmed that it would conduct four six-satellite launches between September 2009 and May or June 2010.

It is likely that the launches will occur from Soyuz’s historical home base, the Russian-run BaikonurCosmodrome in
, but Arianespace and the French government are building a Soyuz launch site at
French Guiana
. If the European launch site is completed in time and conducts one successful launch before Globalstar, the Globalstar launches could occur from the
French Guiana

Jaeger and Navarra said all 24 satellites will be launched from the same spaceport, whether it’s Baikonur or the

They both said the launches will be conducted so as to permit the six satellites carried on each Soyuz to migrate into different orbital planes, depending on where Globalstar determines it is most urgent to fill in voice coverage gaps.

These gaps, caused by a glitch on the current satellites’ payloads, do not affect the Globalstar data communications capability, only the voice service. But the voice service is the most profitable for Globalstar and its degradation has made the company vulnerable to competitors trying to lure away customers.